ECN 3100 PRINCIPLES OF ECONOMICS

1. ECN 3100 PRINCIPLES OF ECONOMICS • Determinants of Demand & Supply Chapter 4 (cont.)

2. Changes in Qd and Qs due to P(points on the SAME curve)  P …  Qd  P …  Qd  P …  Qs  P …  Qs Chapter 4 (cont.)

3. Changes in D and/or S due to Determinants (shifts to a NEW curve) • Decide whether the event shifts the supply or demand curve (or both). • Decide whether the curve(s) shift(s) to the left or to the right. • Use the supply-and-demand diagram to see how the shift affects equilibrium price and quantity. Chapter 4 (cont.)

4. Determinants Of Demand & Supply Chapter 4 (cont.)

5. Increases in Demand +ive changes in Demand: • Consumer income • Normal Goods (Y) • Inferior Goods (Y) • Prices of related goods • Substitutes (Py) • Complements(Py) • Tastes  • Expectations (Pxe) • Number of buyers  Chapter 4 (cont.)

6. Decreases in Demand -ive changes in Demand: • Consumer income • Normal Goods (Y) • Inferior Goods (Y) • Prices of related goods • Substitutes (Py) • Complements (Py) • Tastes () • Expectations (Pxe) • Number of buyers () Chapter 4 (cont.)

7. Increases in Supply +ive changes in Supply: • Input prices () • Technology () • Expectations (Pxe) • Number of sellers () Chapter 4 (cont.)

8. Decreases in Supply -ive changes in Supply: • Input prices () • Technology () • Expectations (Pxe ) • Number of sellers () Chapter 4 (cont.)

9. Question P • Show the changes in market equilibrium for BATIK when the government gives subsidies of machineries and capital funding to the manufacturers. What happens to the market price? What happens to the quantity bought and sold in the market? S E P* D Q Q* Chapter 4 (cont.)